Operating performance around share repurchases – evidence from Poland | Forum Scientiae Oeconomia
Published : 2022-12-30

Operating performance around share repurchases – evidence from Poland


The issue of share repurchases has attracted the attention of numerous researchers and still lacks a consistent explanation. The main aim of the study is to investigate the changes in operating performance around share repurchase announcements. Until now, the majority of research has concentrated on the stock market reaction to share repurchase announcements. This research was conducted on a sample of companies listed on NewConnect (a stock market operated by the Warsaw Stock Exchange in the form of an alternative trading system) devoted to young and growing companies. It is assumed that operating performance improves after share repurchases, and that share repurchases are a method that indicates promising future prospects of young and growing firms. The research sample consisted of 378 firm-year observations (54 companies over a seven-year period). The authors measured the operating performance by means of profitability ratios (ROA and ROE). Operating performance around the share repurchase announcements was compared by applying the Wilcoxon test. The findings suggest that operating performance deteriorates after share repurchase announcements. This contradicts the prior assumptions of this study, which were consistent with the signalling theory of share repurchases. The results imply that the free cash flow hypothesis is more appropriate when it comes to explaining the share repurchase decisions of the sample firms. The findings may be valuable as the scope o research is widened beyond the market reaction to the financial strategy of the company. The research also tackles specific kinds of companies – young and growing – whereas previous studies have focused on mature companies from emerged markets. The findings could be also interesting for investors and company managers.


share repurchases, operating performance, NewConnect, signalling theory, free cash flow hypothesis, mimicking theory





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Bukalska, E., Kaźmierska-Jóźwiak, B., & Rozkovec, J. (2022). Operating performance around share repurchases – evidence from Poland. Forum Scientiae Oeconomia, 10(4), 117–131. https://doi.org/10.23762/FSO_VOL10_NO4_6

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